who will be next World Bank President What will they do
 
 

     
 

All defer to the US A rush of wire service articles from the G8 Finance Ministers' meeting in Potsdam, Germany confirms that, at least as far as these people are concerned, the U.S. gets to retain its control of the World Bank presidency. And the next nomination, according to Reuters, could happen soon -- "early June" is spoken of as the target.

While Alex and commenters on his post just below note that there is at least one comment from the Germans about the U.S. getting to make "the first suggestion," that is clearly not the general tone of the consensus in Potsdam. I've only found only other such suggestion. Interfax reports: "Russian Finance Minister Alexei Kudrin told a news conference in Potsdam, venue of the meeting, that the finance ministers of all G8 member countries accepted the unwritten rule that the United States enjoys the priority right to name a candidate for World Bank president. [...] However, if the candidate named by the United States is considered to be unfit for the job, other candidates may be put forward, he said."

The British, as Alex notes, have no time now for principles, and the Bush-wannabes in Canada are happy to roll over for their allies, and add their testimony that the U.S. is already consulting widely, doing it right.

And it appears that the general reading of Sarkozy -- as close to US-friendly as any French president in memory -- is correct. Thomson Financial News reports that "France does not want to 'profit from unfortunate events' at the World Bank to 'modify the balance which resulted from the Bretton Woods agreement.'"

Recalling that the Japanese had been unusually vocal about their dissatisfaction with the carve-up of the IMF and WB top jobs at the time of the Rato appointment, I had hopes they might say something interesting this time. But no, "Japanese Finance Minister Koji Omi said that ``it's important that the U.S. maintains its leadership of the World Bank for the sake of the overall global economy," reports Bloomberg.

The only government official being widely quoted arguing for an open search is Dutch Minister for Development Cooperation Bert Koenders. His comments can be found just following a quote from US Treasury Secretary Hank Paulson -- and I'm afraid Paulson carries more weight here. He says: "I see no reason why this should change and I see every reason why it's important that the World Bank should continue to be run by an American." Perhaps he needs new glasses.

All of this seems to me to deflate the hopes that "None," in her/his comments, saw in the Board's declaration that it would initiate the process for nominations for a new president. I suspect that was just about the formalities. Yes, the U.S. has always started the process. But the first formal step is for the U.S. E.D. to make a nomination. It is, of course, entirely permissible for someone else on the board to do so earlier. It's just that that isn't done. And it appears that it won't be done this time around either.

All this suggests that the principles established during the Rato succession at the IMF will not be adhered to. At that time, the board at least interviewed a second nominee, who held joint French and Egyptian citizenship. Of course, they did so only after the choice of Rato had been finalized. But it was still considered a nod to the need to reform the process, and consider nominees from other sources.

At the previous IMF succession -- from Camdessus to Koehler -- when things got stretched out because the U.S. (the Clinton/Summers team) had the temerity to "veto" the first European choice, one of the African EDs, Jose Pedro de Morais, tried to shake things up by nominating his own candidate. He chose Stanley Fischer, Camdessus's deputy, a U.S. citizen, whose special appeal for Morais lay in having been born in Zambia. (Morais is now getting his laughs as Finance Minister of Angola, where he's been able to tweak the IMF by declaring Angola's divorce from the institution.)

Someone could do something similar at the World Bank board. Someone should. If only to make a point that very much needs to be made. Better yet, a serious nomination. Any suggestions for who might be a strategic non-U.S. nominee? And for who might do the nominating?

Soren Ambrose ~ May 21, 2007


Comments

Let's Parse the Statements from the news and see what the facts say:


The statements from the Germans are critical, as they led the charge on PW. They are also a major source of funding for the bank.

"Such a decision could be made easier by sticking to the current procedure, and giving the United States the first go at filling this position," German Finance Minister Peer Steinbrueck, who holds the G8 presidency, told reporters in Potsdam. "I wouldn't change that now." (Reuters)

The 'current' procedure is a misnomer --- it does not say since when it has been 'current'.

'Giving the United States the first go' is the dead giveaway.

Since when has the United States only had the 'first go'. The United States had an absolute right to name the President prior to the Wolfowitz debacle.

Recall the discomfort over Wolfowitz's appointment, but the EU swallowed and accepted it before. This statement suggest that it is not the case anymore.

------------------------------

The Russian Finance Minister do not carry much weight, but lets see what he says:

"However, if the candidate named by the United States is considered to be unfit for the job, other candidates may be put forward, he said. " Interfax.

Again, an affirmation that the United States only has the right of first suggestion, but not the right of CHOICE.

-----------------------------

Canada is a middle weight in the debate:

"The U.S. is asking Canada and other countries about who should replace Paul Wolfowitz as the World Bank's president, Canadian Finance Minister Jim Flaherty said." Bloomberg

Look at this: the US has turned the process upside down, from the US shopping a name that is already picked, to asking for suggestions. Clearly a weakening of the US position.

----------------------------

France, another middle weight:

"France will not call into question the traditional arrangement under which the US nominates the president of the World Bank following the resignation of Paul Wolfowitz, according to a G8 source.

France does not want to 'profit from unfortunate events' at the World Bank to 'modify the balance which resulted from the Bretton Woods agreement', the source said.

However, he said it cannot be ruled out that this tradition might be reviewed in the longer term 'as part of a necessary reform of the World Bank'." (Forbes)

The key here is that France's unnamed source did not have a statement on the record as a named source. Even this statement is unequivocal on the tradition being reviewed in the future.

----------------------------

Japan, a staunch US ally, carries weight:

Japanese Finance Minister Koji Omi said that ``it's important that the U.S. maintains its leadership of the World Bank for the sake of the overall global economy.'' (Bloomberg)

But note that the phrase leadership is vague --- it does not deal with specifics as to whether the US retained the right to appoint the next President.

The right to appoint the next President is not the right of first suggestion.

---------------------------

Consequently, the balance of probabilities is that the selection process have changed.

No one, not even Paulson, is saying that the United States will appoint the next President without qualification.

It may not be the extreme reforms that many seek at the Bank, but it is a huge step forward for better governance.

Call me optimist.

I applaud the EDs for their fine work in bringing the Wolfowitz saga to a soft landing.

Hats off to the master diplomats and wordsmiths who crafted these communiques.


None ~ May 21, 2007, 04:23 PM

None: The glass may be half full but at this troubled time we need a full glass to take things forward. The international community is not too bothered, and the US will choose the next President. A tentative conclusion is that the world does not really care that much about the World Bank in itself. What they do care about is the delicate balance of appointments in a whole range of institutions, from the WTO to the Asian Development Bank, and the World Bank is now a "middle weight" contender in a much broader race. Sadly, through bad strategy, poor leadership and weak goveranance the World Bank is no longer a strong central player in the development scene. This bodes ill for the quality of the next President: the best people will see the Bank as a potential quagmire for their careers (the Wolfowitz saga showed the job is not without major career risks). So the most likely outcome will be another "barely acceptable" US mediocrity (or semi-retiree) like all the Presidents except McNamara and Wolfensohn. [For a picture of how things will now move rapidly read the section about how Conable ended up geting the job in Mallaby's book "The World's Banker"].

Grammaticus ~ May 21, 2007, 04:58 PM

It takes very little thought to make sloppy generic statements such as " through bad strategy, poor leadership and weak goveranance the World Bank is no longer a strong central player in the development scene". From reading the reports on the G8 meeting in Potsdam it appears that the WB was almost the main point of discussion. The Bank is also at the center of the coordination efforts in the many Donors' conferences on key countries and IDA replenishment discussions will determine the financing of the low income countries.
The US Administration will nominate the candidates, what the statements from the rest of the world are telling the Treasury and the White House is that this time they should be more careful about how they choose the new president.

Parsimonious ~ May 21, 2007, 05:29 PM


I concur, Gram.

With the following proviso. The international community cannot be indifferent to a clearly bad appointment that ends up eating up valuable time, resources, and capital to fix.

Lots of multilateral agency appointments are done with hardly a whimper (just think of the size of the international bureaucracy and the umbrella of UN, regional, and other agencies), and do not involve diverting G8 finance ministers away from their more important tasks like making sure they get re-elected or appointed.

The Wolfowitz appointment was an exception --- it is exceedingly rare for a head of a multilateral agency to be ousted (almost never), and to have not only the fight, but the institution dragged through the mud.

Even if they appointed a figurehead (name any semi-comatose retiree, like President Paul Hindenburg in his second term), things would have been fine.

Of course, wouldn't everyone prefer if they appointed a truly outstanding leader who will take the organization to new heights? But that is unlikely to happen.

The outstanding staff of the Bank can deal with an incoming politio who knows nothing about development. But it cannot deal with the madness that went on under the Wolfowitz regime.

Simply put: the Bank is such a good organization that it largely runs itself. It does need a good 'name' head. If the head does some good, that is a bonus.

That is why the international community acceded to the arrangement to allow the US to select the President. Why not when it worked perfectly fine up until PW? However, now that it has bombed, the arrangement has to be called into question.

Here is a tip for the incoming President: Buy the "Yes, Minister, and Yes, Prime Minister" comedy series, and watch it prior to taking office.

None ~ May 21, 2007, 05:53 PM

Warning:

Blogging can be addictive
and hazardous to your mental health

Engage brain before blogging.

Blogorrhea is a terrible thing to get.

Imodium ~ May 21, 2007, 06:11 PM

How about Dr. Muhammad Yunus, Nobel Laureate and Founder of the Grameen Bank as a nominee?

WB Insider ~ May 21, 2007, 08:58 PM

Yunus just accepted a big decoration from that paragon of fiscal rectitude and even-tempered policy and prosperity, Hugo Chavez, and offered his own words of high praise to the man who rules by decree.

Won't happen, on that ground alone.

By the way, what's Hugo been doing to the bank's financial position anyway by threatening to pull out of the World Bank?

A.M. Mora y Leon ~ May 21, 2007, 09:11 PM

M. Yunus would make a great WB president, but he needs the World Bank more to oppose it than to work with the Bank. The bushitas would never nominate him, do not dream.

Hugo knows how to play the press and do his agit-prop stunts. He can say he will pull out of the Bank and the Fund but he also knows that if he pulls out, all the loans, bonds and financial instruments of Venezuela which are guaranteed by the Bank will be callable or in default.

The next financial crisis in Venezuela will arrive as soon as oil prices start falling again. US Treasury, the IMF, the BIS, the WB and the IDB will have to be there to provide resources. Hugo if he is smart enough to run away in time will be in Cuba with his buddy Fidel.

Bolivariano ~ May 21, 2007, 09:47 PM

No matter what the process ends up to be for selecting the new WB president, all the suggestions indicate it will continue to be a political one, no less than the selection of the SG of the UN, the Chair of the UN Human Rights Commission, UNESCO, UNDP, WHO, etc. But there is a more market-oriented approach, which may introduce greater transparency and accountability into the performance of the Management and the Board of Directors at the Bank. This approach derives directly from the nature of the Bank as a financial intermediary institution. Rather than leaving the "oversight" of the Bank to a bunch of politicians, there should instead be introduced a more important role for the capital markets to exercise a major part -- if not all -- of that oversight, by removing any vestige of guarantee for the WB bonds by the member states, which is currently the case. Can you imagine a weekly conference call between the WB Senior Management and the major participants in the world money markets discussing the WB's financial performance and projections, such as GE or Credit Suisse or ABN AMRO has to do? The results of those conversations could be immediately visible in the value of the WB's outstanding debt instruments! This might do a whole lot more for transparency and accountability than the seemingly endless variety of utopian political approaches to the problem.

Del Fitchett ~ May 21, 2007, 10:14 PM

As an optimist, I see this G-8 acquiescence in maintaining the US perogative in WB President nomination as looking beyond the Bush Aberration, and as an American, that gives me hope that the damage he has inflicted on our country and the world, though unforgiveable and horrible, is not irreversible.

The Mahdi ~ May 22, 2007, 01:41 AM

Clever people here, but while clever can be fun and entertaining it gets lost in the hot air of the blogosphere.

A couple of questions: what are the changes that a new president should try to implement at the Bank?
What is the new vision that is required and what type of reorganization is needed?
Propose something useful all the rest is just sound and fury.

Out, out, brief candle!
Life's but a walking shadow, a poor player
That struts and frets his hour upon the stage
And then is heard no more: it is a tale
Told by an idiot, full of sound and fury,
Signifying nothing.

Macbeth ~ May 22, 2007, 02:23 AM

Well, there it is...The Mahdi mentions the Bush Aberration, and Macbeth quotes Shakespeare on idiots. Melifluous symmetry.

I don't accept the trite but unqustioned left- and-right premise that every Monsieur/Madme Nouveau (Nouvelle) President(e) de la Banque Mondiale must "implement changes". Some of us saw Woldensohn do that, others also Wolfowitz, and what these duo-loups had in common was that their fixing involved mostly breaking what was working.

Frankly, the premise that a couple of ignorant egomaniacs know the Bank's business better than the Bank does, is an insult to the orgaqnization's professionalism, strength and resiliency.

So pulleeeze, this time, spare us the arrogant hubristic ignoramuses and ideologues with their fixes, so that the Bank can get its work done. For the sake of the world's poor, it's hard enough dealing with what's out there, so enough awready with the toxic fixes.

The Mahdi ~ May 22, 2007, 04:14 AM


Would someone please clarify whether this is a 3 year appointment (to fill out the balance of the 5 year term) or a 5 year appointment (as if a new President is installed)?

Thanks

None ~ May 22, 2007, 12:57 PM

Open Letter to EDs:

The issue of Ana Palacio signing a letter published in the IHT on Turkey is a clear case of violation of Bank Rules prohibiting such political activity.

Although Ms Palacio did not sign her affiliation as World Bank, given her high profile position in the Bank, there is no question that her standing as a Bank staff member is well known, and thus, it is impossible to disassociate her Bank affiliation from what she may, in her mind, regard as her 'private action'.

The rule against political activity was placed there to protect all Bank staff, as the actions of even one staff member can place all Bank staff at risk by having the Bank seen as favoring one political faction over another in a country that the Bank operates in.

Ana Palacio is not any staff member. She is Corporate Counsel, and as such, she is the chief legal adviser to the Bank and a key staff in upholding the integrity of the Bank and in adjudicating whether activities by the Bank and its staff are legal. As such, there can be but zero tolerance for her willfully, deliberately, and intentionally violating Bank rules.

It is clear that Mr Wolfowitz cannot be expected to take proper action in this case, nor will INT.

Under such circumstances, sadly, it is imperative for the Board to step in again.

Bank credibility is at stake.

Sincerely,

Outside Observer

nin ~ May 22, 2007, 02:57 PM

Only a neocon fellow-traveler WB General Counsel would show the lack of probity and ignorance or disaddin for the Bank's staff rules that this Palaciowitz woman has displayed in signing that undebatably political letter.

I agree with the Outside Observe that the Board must take action to terminate immediately Palaciowitz for egregious disregard for the Staff Rules and Code of Conduct.

And while they are at it, please also deal with the rest of the Cronies, and very soon.

The Mahdi ~ May 23, 2007, 04:26 AM


Dear Mahdi:

What if you met Chinese Gordon?

Would he die from your miracle as you would die from his?

Grin

Gordon ~ May 23, 2007, 05:15 AM

 
 
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